The market ended the week on a mixed note as a late rally in tech stocks helped the S&P 500 and Nasdaq break their five-day losing streak, though both indices still closed lower for the week. Investors welcomed gains in semiconductor and energy sectors, with Nvidia and Vistra among the standout performers. Despite Friday’s rebound, market sentiment remained concerns over global economic growth and recent volatility continued to weigh on investor confidence. The Dow also climbed, supported by optimism in the industrial sector, while Europe and China faced with a subdued start to the year, signalling continued challenges ahead for global markets.

Key Takeaways:

  • S&P 500 and Nasdaq End Losing Streak, Close Higher on Friday: The S&P 500 gained 73.92 points, or 1.26%, to close at 5,942.47, snapping its five-day losing streak but ending the week down 0.5%. The Nasdaq Composite advanced 340.88 points, or 1.7%, to 19,621.68, recovering from earlier losses but still posting a 0.6% weekly decline. Both indices benefitted from a strong rally in tech stocks, particularly in the AI and energy sectors, but concerns over broader economic trends continue to weigh on sentiment.
  • Dow Gains on Optimism in Industrials but Ends Week Lower: The Dow Jones Industrial Average climbed 339.86 points, or 0.8%, to close at 42,732.13 on Friday, supported by strength in industrial and energy stocks. Despite the strong daily performance, the index still ended the week down 0.6%, reflecting lingering concerns about the economic outlook and volatility in the broader market.
  • European Markets Close Lower as Autos and Financial Data Weigh on Sentiment: The Stoxx 600 index fell 0.49%, erasing most of Thursday’s gains, as auto stocks dropped 1.79% and travel and leisure stocks declined 1.62%. The FTSE 100 gained 0.91% for the week to close at 8,223.98, outperforming the broader region. However, the DAX in Germany slipped 0.59%, and France’s CAC 40 fell sharply by 1.6%. Stellantis was among the worst performers, sliding 3.8% after reporting a 45.7% decline in production in 2024—the lowest output since 1956. In the UK, Bank of England data showed that consumer credit grew at its slowest pace since June 2022, rising by 6.6% year-on-year in November, down from 7.3%. Additionally, mortgage approvals were weaker than expected, further signalling a slowing economy.
  • Chinese and Asian Markets Post Mixed Results Amid Stimulus Expectations: Mainland China’s CSI 300 index fell 1.18% to close at 3,775.16, extending its 2.9% loss from the previous session. Bond yields hit record lows, with the 10-year yield dropping 1.5 basis points to 1.598%, as reports suggested the People’s Bank of China is planning interest rate cuts and increased issuance of ultra-long bonds to boost the economy. The Hang Seng index rose 0.42%, supported by optimism surrounding potential subsidies for consumer electronics. In broader Asia-Pacific markets, South Korea’s Kospi gained 1.79% to close at 2,441.92, driven by a 6.25% surge in SK Hynix shares following its AI-focused strategy announcement. Australia’s S&P/ASX 200 rose 0.60% to close at 8,250.50, while Japan markets were closed for a holiday.
  • Oil Posts Weekly Gains Amid Stimulus Expectations: Oil prices climbed for the week, with Brent crude rising 0.76% to close at $76.51 per barrel and West Texas Intermediate gaining 1.13% to settle at $73.96. Brent posted a 3% weekly gain, while WTI added nearly 5%, lifted by expectations of Chinese stimulus measures and declining US crude stockpiles, which fell by 1.2 million barrels last week, though below analysts’ expectations of a 2.8-million-barrel draw.
  • US Treasury Yields Edge Higher as Economic Data Remains Mixed: The yield on the 10-year Treasury rose 1 basis point to 4.587%, while the 2-year Treasury yield climbed 2 basis points to 4.266%. Treasury yields remain down for the week, reflecting mixed signals from US economic data. The ISM manufacturing PMI for December came in at 49.3, above expectations of 48.0 but still below the expansionary level of 50. Initial jobless claims for the week ending December 28 fell to 211,000, below the forecasted 225,000, signalling continued resilience in the labour market.

FX Today:

  • EUR/USD Holds Above 1.0300 Despite Challenges: The EUR/USD pair rose 0.45% to close at 1.0307, rebounding from its recent low of 1.0223. While the pair remains in a downtrend, Friday’s recovery reflects consolidation as traders assess mixed US economic data. Immediate resistance is located at 1.0408, with stronger barriers near 1.0500, where the 50-day SMA aligns. On the downside, support lies at 1.0200, with a break below this level opening the door to the key psychological level of 1.0084. Technical indicators suggest continued selling pressure, with moving averages sloping downward and RSI signalling neutrality. The broader bearish structure remains intact unless the pair can decisively reclaim 1.0500.
  • GBP/USD Faces Resistance Amid Recovery Attempts: GBP/USD rose 0.39% to 1.2422, bouncing back from recent lows but remaining under significant pressure. The pair is trading well below its 50-day SMA at 1.2712, highlighting the ongoing bearish momentum. Immediate resistance is seen at 1.2575, with stronger barriers near 1.2700. On the downside, support lies at 1.2350, with a further decline potentially targeting the 200-day SMA at 1.2260. Technical indicators show RSI approaching neutral levels, suggesting the potential for short-term consolidation. However, the longer-term outlook remains bearish, with traders likely viewing any rallies as opportunities to reenter short positions.
  • USD/CAD Continues Uptrend, Tests Multi-Month Highs: USD/CAD advanced 0.29% to close at 1.4441, continuing its steady uptrend and nearing multi-month highs. The pair is supported by its 50-day SMA at 1.4098 and 100-day SMA at 1.3850, confirming the strength of the bullish trend. Resistance at 1.4500 remains a key level to watch, as a breakout could target 1.4700, last seen in late 2022. On the downside, immediate support lies at 1.4340, with further declines potentially testing 1.4185. RSI signals overbought conditions, cautioning traders about entering new long positions. However, as long as the pair remains above its moving averages, the bullish outlook is expected to persist.
  • USD/CHF Subdued Despite Bullish Trend: USD/CHF closed at 0.9075, down 0.38% after failing to break above the 0.9140 resistance level. Despite the decline, the pair remains in a strong uptrend, supported by its position above the 50-, 100-, and 200-day SMAs. Immediate support is seen at 0.9040, a critical psychological level, with further downside potentially targeting 0.8845, supported by the 100-day SMA. On the upside, a breakout above 0.9223 could pave the way to test the 0.9300 resistance. Overall, the trend remains bullish, with positive momentum backed by strong US dollar dynamics.
  • Gold Retreats but Holds Key Support Levels: Gold prices slipped 0.71% to $2,638, retreating from resistance near $2,650 as traders locked in profits following recent gains. Despite the decline, the metal remains well above its 50-, 100-, and 200-day SMAs, signalling that the broader uptrend is intact. Immediate support lies near $2,620, aligned with the 100-day SMA, with further downside potentially testing the psychological $2,600 level. On the upside, a break above $2,650 could signal a resumption of the bullish momentum, with $2,685 and $2,700 as the next targets. Technical indicators remain neutral, reflecting a consolidation phase as traders await fresh catalysts such as inflation data or geopolitical developments.

Market Movers:

  • Rivian Automotive Soars on Strong Production Figures: Rivian Automotive’s shares skyrocketed 24.5% after the electric vehicle maker reported that its vehicle production and deliveries for 2024 met the company’s previously announced guidance. 
  • US Steel Drops Following Biden’s Block on Acquisition: US Steel shares fell 6.5% after President Joe Biden announced he blocked Japan’s Nippon Steel from acquiring the company in a $14.9 billion deal. 
  • Block Jumps on Analyst Upgrade: Shares of fintech company Block surged 6.2% after upgraded the stock to “outperform” from “market perform.” The analyst highlighted Block’s attractive valuation despite its recent rally.
  • Chewy Gains Momentum Following Analyst Upgrade: Chewy shares climbed 6.2% after Wolfe Research upgraded the pet retailer to “outperform” and named it a top internet stock idea. 
  • Carvana Plunges on Fraud Allegations: Carvana shares sank 11.2% after short-seller Hindenburg Research accused the company of using unstable loans and accounting manipulation to drive its turnaround narrative. The online used-car seller, which surged 284% in 2024, is facing increased scrutiny as it begins the new year with a 5% decline so far.
  • Vistra Extends Rally on Continued Momentum: Vistra shares jumped 8.5%, building on Thursday’s 8% gain, making it one of the top-performing stocks in the S&P 500 to start the new year. The company’s stellar 2024 performance, where its stock soared 258%, solidified its position as a standout in the energy sector. 

As the first trading week of the year wraps up, markets showcased a mix of resilience and caution. The S&P 500 and Nasdaq snapped their losing streaks with a strong Friday rally, though weekly losses persisted, while the Dow also rebounded on the back of industrial strength. European markets faced renewed pressure from weak economic data and sector-specific declines, while Asian markets delivered mixed results as Chinese equities struggled amid signals of policy adjustments. In the energy market, oil prices posted solid weekly gains, supported by expectations of stimulus measures in China and declining US crude stockpiles. Meanwhile, the FX market reflected consolidation and measured recovery across major currency pairs, with gold maintaining its bullish structure despite a slight pullback.